Moving to Canada: Home Buying Guide for Expats

Canada is one of the most preferred countries for many to consider moving to settling down. The country offers plenty of benefits for expats for a stable living. Best of all, buying a house in Canada is fairly easy and straightforward for the foreigners who are currently living here or planning to move. 

There is an open-door policy in Canada for foreigners to own property, meaning non-citizens enjoy the same ownership rights as the Canadian citizens. If you plan to live in the country for less than six months, then you are still eligible to buy a house and open an account. However, if you want to live in Canada for more than six months, you will have to apply for immigration. 

Whether you plan to live in the country for short duration each year or want to settle here, there are certain steps you must follow to become a home owner. Here, we have highlighted the important steps you need to go through in order to become a home owner in Canada. 

Home Buying Steps for Expats 

Following are some steps involved for expats to become home owners in Canada. These steps are integral to follow before you start looking for a house and will ensure that the entire process goes smoothly for you. 

Step 1: Establishing Credit History 

The most common way of purchasing a home in Canada is through a mortgage, which is a loan for home-purchasing taken from a credit union, bank, or other lenders. To make sure that you secure a mortgage, you will need to make a down payment of a minimum of 5% of the overall price of the house you intend to buy. Moreover, if you are paying the down payment which is less than 20% of the purchase price, then you will need to secure mortgage insurance. 

To approve any mortgage application, lenders typically assess the credit history and financial situation of the applicants. This helps them in determining whether or not the applicant should be approved. Therefore, it is essential for expats to establish a credit history and financial record in Canada. 

Here is how you can achieve a good credit history once you arrive in the country:

  1. As soon as possible, open up a bank account and deposit your savings, as well as current and future pay checks in this account. Utilize this account to make monthly payments for utilities, rent, and other necessities. This will help in creating your financial record in Canada, which isn’t possible with cash payments. It will prove you are financially responsible to pay back the monthly mortgage payment. 
  2. Secondly, it is essential to maintain all your paperwork. When you apply for mortgage, a lot of relevant paperwork is required, including bank statements, utility bills, pay slips, and more. I highly recommended that you maintain a file to store in all the financial paperwork for easy access. 
  3. Lastly, make sure you apply for a credit card, as this is an ideal way of building a credit history in Canada. In case you are not eligible for the usual credit card, try the secured credit card. This card usually needs a security deposit. No matter which credit card you opt for, be sure to make the payment in a timely manner or make the minimum monthly payment at least. Also ensure that you restrict the balance of the credit card to about 50% or less of your available credit. 

Having a good credit history will ensure that you get instant approval for the mortgage when you apply. This will make it easier for you to purchase a house in Canada. 

Step 2: Financial Considerations

For expats hoping to buy a home in Canada, there are financing options available at 65% of the overall purchasing price of the house, with 35% down payment. You will have to directly apply to the bank for mortgage. In order to qualify for mortgage, aside from the credit history, you will have to go through various interviews via emails, fax, and phone to gather the necessary information. This information will include tax returns, income verification, liabilities, and assets. 

Your bank in your home country isn’t authorized to register Canadian mortgages, which is why mortgage must be raised by a Canadian bank or mortgage broker. To determine the amount of mortgage you will need, it is important that you are aware of all the associated costs, including:

  • Closing legal fee
  • Insurance 
  • Inspection charges
  • Bank appraisal fee (might not be required)
  • Property transfer tax
  • Purchase price
  • Lawyer fee
  • Real estate agent fee

You will need the services of a notary public lawyer to create the necessary documentation and to register at the office of land title. Moreover, it is also recommended for expats to hire a real estate agent to help in getting the right house and information about the Canadian real estate processes. 

Step 3: Start Down Payment Savings  

Another integral step towards becoming home owners in Canada is to save up for down payment of the house. The higher the amount of payment you make as down payment, the lesser amount you will have to pay every month for the mortgage. Moreover, the seller is more likely to give preference to the potential buyers willing to make a bigger down payment. This means there are more chances of getting your asking price accepted by the seller.

You must also bear in mind that if you are making a down payment which is lower than 20% of the purchase price, you will also have to buy mortgage default insurance. 

Saving up for a house can be challenging, especially for individuals who have recently moved to a new country for a fresh start. I always advise the expats, even the citizens hoping to become homeowners, to create a realistic budget and stick to it. Find different ways to save up as much as you possibly can to ensure you make a down payment of more than 20% of the purchase price to make things easier for the coming months. 

Step 4: Identifying Must-Have Home Features and Short-Listing Communities

This step might not be as crucial as the previous ones; it is still an integral part of the homeownership process. Since you will be making one of the biggest investments if your lives when you move to a different country and buy a house, you must ensure you are making the right one. 

Start looking up different neighbourhoods and communities to determine which one would be ideal for you and your family. Shortlist a few areas based on the factors that are important to you, including the school district, your work commute, affordability, and more. Similarly, making a must-have features list for your future home will further make your decision easier. 

Both of these elements will help you in making an informed decision that will be beneficial for you and your family for years to come. 

Step 5: Hiring the Right Team

Lastly, hiring the right team to help you throughout the home buying process is another good decision you would make to make things easier for you. Being new in the country means you might not be well aware of the real estate and legal process involved in purchasing a home. Consulting experienced individuals will make the entire process smoother. 

Your team would include a real estate agent, mortgage or financial advisor, real estate lawyer, and home inspector. These professionals will make sure you find the ideal home to settle in and get you the best possible deal, all the while ensuring all the paperwork is thoroughly taken care of. 

Moving to a new country can be exciting, but challenging, which is why I offer expats a range of services to make this transition easier. From helping you identifying ideal neighbourhoods for you and your family, to assisting you in finding the perfect home – I am here to help. My business has been built on referrals and I am always ready to assist them with all real estate queries.